The days of being a corporate drone are dwindling as people are being ignited to pursue their passions. But where do you start? Here are some tips for going freelance so you don't jump ship without a life jacket!
You're ready to take the plunge, but what's the first step? Write down your goals, both financial and professional, as well as your mission statement, services you'll provide and what you want to get out of your business. Keep this is a convenient place for revisiting quarterly.
GET YOUR FINANCIALS IN ORDER
Michelle Evard, CFP, of Evard Financial Advisors, PLLC, recommends having at least six months of living expenses saved before leaving your current position. She also advises people to develop a
spending plan, essentially a not-so-frightening term for budget.
PLAN FOR RETIREMENT
Retirement saving is often offered as a benefit for corporate employees, but freelancers can plan just the same. Evard recommends putting away at least 15% of your income for retirement and says
there are several options for retirement saving. An Individual Retirement Account (IRA), Roth IRA and basic savings account are a few simple options.
ESTABLISH YOUR BUSINESS
There are various business registration types, including sole proprietorships, partnerships, corporations, S corporations, and limited liability company (LLC). Meet with a lawyer or qualified business consultant to review the legalities of each type, and register your business.
PLAN FOR INITIAL EXPENSES
It's the chicken and the egg concept. Starting a business costs money, and making money is the very reason you begin a business! List every initial expense you will incur in the first few months of
freelancing, even the unlikely, so there are no surprises.
SUBMITTING TO UNCLE SAM
Independent contractors are subject to different tax regulations than full-time corporate employees. For example, as a self-employed individual you may be required to pay estimated taxes four times a year. Consider opening an additional bank account (other than your bank business account) to save 20 to 30%
for taxes and retirement.
RESOURCES FOR MORE INFO
* The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich by Timothy Ferriss
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